As the owner of a used car, at a certain point, you stop panicking when the ‘Check Engine’ light turns on. Repairs both big and small are part of your weekly routine, so much so that your auto mechanic knows you by name. You turn up the radio volume in hopes of muting any awkward sounds and use duct tape to hide any visual mishaps. You’ve also fully mastered the perfect poker face in response to strange stares from strangers as you pull into the parking lot.
Although you’re hesitant at first, a part of you knows this relationship is over. Taking the right approach will prove this is an easy feat as long as you know your options from the start. New Jersey auto dealership Apollo Preowned Auto invites you to read on about the pros and cons of trading in or selling a used car to a preowned auto dealer.
Leaving your car under a highway isn’t exactly a choice. There are two simple options to choose from. One, trade in your used car for a new car at an auto dealership. Two, sell it. Now, you may start seeing dollar signs pop up as you consider the latter, but the former will likely be the smarter choice. Trading your car in guarantees a new car and a rebate. Win-win, if you ask us.
Trading in your car with a car dealer makes your life easier for yet another reason: paperwork. Basically, we do it all for you. Your job is to bring in your car, we do the rest. The process consists of a dealer evaluation, resulting in a price quote. Once you receive and accept the offer, you put the money down towards a new car at the same dealership. You drive your old car to the dealership and leave with the new one. ‘In with the old, out with the new’ takes on a whole new meaning here.
Another question that we hear often from folks selling a car relates to taxes. The IRS needs to know about this car trade transaction, but which route is the safer bet in terms of state taxes? The good news is that, in terms of the tax benefit, it is also better to trade your car in than sell it outright.
According to an article on Zacks Finance, when trading in your old car for a new car, “you will get some sort of sales tax credit on the value of your trade.” Meaning, the tax you’re obligated to pay is dependent on the value you are paying, minus the trade. Let’s do the math for you. If paying $25,000 on a new car with a $10,000 rebate you received for your old car, you will need to pay tax for the $15,000 difference.
The final tax will be calculated according to your state’s sales tax. So if your state has an 8.5% sales tax, your tax will equal to around $1275. Now, if you sell it, you have no obligation to pay a sales tax, considering that this is a capital loss for you, but if you decide to purchase a new car in the near future, you would be required to pay tax for the entire amount, sans the sales tax credit.
Whichever option you choose to buy a new car in New Jersey, focus on the long run. Saving a bit here and now might make you spend more in the future when you eventually decide to become the owner of a new car. Regardless of the path you take – selling or trading a used car – your old automobile will surely be in good hands and you’ll have a chance for a fresh start. Used car dealership Apollo Preowned Auto can help you today.